OpenAI said on Friday that in moving towards a new for-profit structure in 2025, the company will create a public interest body to oversee commercial activity, removing some of the non-profit restrictions. and allowing them to operate more like a high-growth startup.
“The hundreds of billions of dollars that leading companies are now investing in AI development shows what it will really take for OpenAI to continue the mission,” the OpenAI board wrote in the post. we again raised more capital than we expected. Investors want to support us but, at this level of capital, we need conventional equity and less structural expediency.”
The emphasis on OpenAI is linked to its $157 billion valuation, achieved in the two years since the company launched its viral chatbot, ChatGPT, and started the rise of next-generation artificial intelligence. Open AI the last $6.6 billion round closed in Octoberpreparing to compete strongly at Elon Musk xAI as well Microsoft, Google, Amazon and Antropic in a market that expected to exceed $1 trillion in income within ten years.
The development of the large language models at the heart of ChatGPT and other AI generation products requires continued investment in high-powered processors, largely provided by Nvidiaand cloud infrastructure, which OpenAI gets largely from major sponsor Microsoft.
OpenAI expects about $5 billion in losses on $3.7 billion in revenue this year, CNBC confirmed in September. These numbers are increasing rapidly.
By converting to a Delaware PBC “with common shares of stock,” OpenAI says it will be able to continue commercial operations, while hiring separate staff for its nonprofit arm and letting with that wing to undertake charitable activities in health care, education and science.
The nonprofit will have a “significant interest” in the PBC “at a fair valuation determined by independent financial advisors,” OpenAI wrote.
The complex structure of OpenAI as it is today is the result of its creation as a non-profit organization in 2015. It was founded by CEO Sam Altman, Musk and others as a research laboratory focused on intelligence artificial general, or AGI, which was a completely futuristic concept at the time.
In 2019, OpenAI aimed to move beyond its role as a research lab only with the hope of operating more like a startup, so it created a model called profit with a cap, with the or -profit still controls the entire entity.
“Our current structure does not allow the Board to directly consider the interests of those who would finance the mission and it does not allow the non-profit organization to do more than to control profitability,” OpenAI wrote in a Friday post.
OpenAI said the change would “enable us to raise the necessary capital on standard terms like our competitors.”
against Musk
OpenAI's efforts to restructure face some major hurdles. The most important one is Musk, who is in the middle of a heated legal battle with Altman that could have a big impact on the future of the company.
In recent months, Musk has sued OpenAI and asked a court to stop the company from changing from a for-profit corporation to a non-profit entity. In posts on X, he described that effort as a “total scam” and said that “OpenAI is evil”. Earlier this month, OpenAI withdrew, claiming that in 2017 Musk “not only wants, but actually created, for profit” to be the new structure that was planned at the company.
In addition to the confrontation with Musk, OpenAI has been dealing with an outflow of top talent, in part due to concerns that the company has focused on bringing commercial products to market at the expense of safety.
In late September, OpenAI's Chief Technology Officer, Mira Murati, announced that she would leave the company after 6½ years. On the same day, head of research Bob McGrew and Barret Zoph, vice president of research, announced they were leaving. A month earlier, co-founder John Schulman he said he was leaving for rival startup Anthropic.
Altman said in an interview in September at Italian Tech Week that the recent actions were not related to a possible restructuring of the company: “We have been thinking about that – our board has been – for almost a year independently, and we think what it will take to get. to our next level,” he said.
These were not the first outings with big names. In May, OpenAI co-founder Ilya Sutskever and former security director Jan Leike they announced their departurewith Leike also joining Anthropic.
Leike wrote in a social media post at the time that a disagreement with leadership over company priorities led to his decision.
“Over the years, safety culture and processes have backed up shiny products,” he said. write.
One employee, who worked under Leike, stopped writing soon after on X in September that “OpenAI was structured as a non-profit, but operated as a for-profit.” The employee added, “You shouldn't believe OpenAI when it promises to do the right thing later.”
